I am a Toronto-based entrepreneur who owns Qwatro RoyalPak and Oxford Marketing. We're growing through acquisition - a great way to increase your top line, but integration isn't easy and layoffs aren't fun. I talk about what goes on behind the scenes as a contributor to Forbes. I want to get as big as we can, as fast as we can. We're currently hunting for our third acquisition in the cleaning products industry in 24 months.
I am also co-founder of The Entrepreneurship Society, which hosts invite-only networking events for high-growth business owners.
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Merging Two Companies Is Hard -- Here's How To Do It

Be prepared to bump up against a lot of cultural challenges during the integration process.

Traditional bricks-and-mortarcompanies are increasingly tough to sell to Gen Ys in today’s tech-fueled economy. More sellers than buyers equals opportunity. When I purchased a cleaning products manufacturer in 2012, its business practices needed a serious upgrade. A direct competitor was operating well below peak capacity when I bought it about a year later.

The first company was strong operationally, while the other had the advantage of a green-products line and high-quality sales and marketing staff. At the close of the second deal, half of that team was terminated and its factory was shut down in two weeks. It didn’t make sense to continue running the businesses independently. The merged operation is more innovative and significantly more profitable. This is a typical synergistic acquisition, where 1 +1 = 3.

Buying companies in mature industries can be a very smart play for young entrepreneurs looking to separate themselves from the pack. Once you’ve made a successful acquisition, it gets easier to arrange the next one, as professional service providers are more likely to line up to help you and you have improved access to capital.

From a business standpoint, merging companies in the same sector with competing strengths is a no brainer. And it’s technically not difficult to do. But be prepared to bump up against a lot of cultural challenges during the integration process.

Here’s what you need to know:

A merger will take longer than you expect. You can’t put former competitors together and expect them to get along from day one. They’re used to thinking of each other as the enemy, sometimes over the course of many years. You need to carefully manage reporting lines and watch for signs of tension so you can nip them in the bud before they blow up.

Leaders will come and go. Don’t assume managers who say they’re committed to the new company truly are. Loyalty is hard to come by, and you may find people will jump ship as soon as a better offer comes along. Your remaining competitors will try to use your merger to their advantage. Be prepared to deal with upheaval.

Make sure your staff is consistently thinking about the future, both near- and long-term. You also need to lay out a road map to success. A nimble, innovative company doesn’t just happen, it needs to be nurtured. The person at the top sets the tone.

Competitors won’t be the only ones who’ll try to kick you when you’re down. When you’re ironing out the merger kinks, customers might try to squeeze you for better deals and threaten to bolt to the competition. That’s why you need to engage with them early. Convince them you’ll always be the best option, no matter what.

Children are not the only people who get emotional. Working lives are more closely tied to personal lives than ever before. Employees get attached to each other and they don’t always embrace change. Listen to them, and provide support and reassurance when required.

Don’t underestimate the challenges of merging accounting systems, particularly if the two companies have different year-ends.

Remember, your company is only as strong your team. You need good people. When you merge two companies, employees are always biased toward the people and products of their original company. It’s often a good decision to parachute in new unbiased management – specifically your finance team.

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